IHG recently updated their rewards program and credit cards in positive ways. Now, more than ever, I expect that many readers are considering earning IHG points through credit card spend (so as to also earn top tier elite status), and through stays. That makes it more important than ever to understand the value of those points. That’s what this post is for. For other recent posts about IHG, see:
- Wow! IHG to offer real elite benefits. Watch out Marriott.
- Which hotel elite program is best?
- Which hotel loyalty program is most rewarding on paid stays?
In order to determine the value of IHG points, I collected real-world cash prices and point prices. As I’ve done previously, I examined a number of major hotel markets in the U.S.: Chicago, Denver, Los Angeles, Hawaii, Las Vegas, Miami, New York City, Orlando, and Seattle. Within each market, I identified the first three search results with a guest rating of 4.1 or better, and I recorded both cash and award prices for three dates each: a weekday, a weekend, and a holiday weekend.
- Why U.S. only? U.S. consumers are known to spend most of their points and miles on domestic travel. Since the majority of this blog’s audience resides in the U.S. we opted for a U.S. centric view of point values.
- Why Guest Ratings? The goal wasn’t to find the 3 best hotels in each market. Instead, the goal was to find 3 points bookable hotels that are very popular. Which ones are people really likely to book? By using a combination of default sorting and by picking only highly rated hotels, I think it’s reasonable to assume that many members would pick these hotels.
- Which paid rates were selected? I always picked the best refundable paid rate shown on the hotel’s website, but without applying any discounts like AAA, military, government, etc. In most cases, I selected the hotel’s member rate.
- What about point earnings on paid rates? An ideal analysis may include the value of point earnings on paid rates. For simplicity, this was not considered in this analysis. This decision has the effect of over-valuing points. See the section on Overvaluing vs. Undervaluing Points for more details.
- What about taxes and fees? For simplicity, taxes and other fees are not included in this analysis. This decision has the effect of under-valuing points. See the section on Overvaluing vs. Undervaluing Points for more details.
- Which specific dates did I use?
- Weekday: Wednesday Nov 16, 2022
- Weekend Day: Friday Nov 18, 2022.
- Holiday Weekend Day: Saturday Nov 26, 2022 (Thanksgiving Weekend).
|Point Value (Median)||0.59||0.64||0.43||0.64|
|Point Value (Mean)||0.60||0.58||0.54||0.67|
|Cash Price (Median)||$253||$238||$238||$213|
|Cash Price (Mean)||$281||$233||$237||$229|
|Award Price (Median)||43,000||40,000||47,000||35,000|
|Award Price (Mean)||46,857||45,286||48,952||34,603|
|Minimum Point Value||0.39||0.28||0.28||0.40|
|Maximum Point Value||1.11||0.98||0.98||1.29|
The median observed point value was 0.59 cents per point and the mean was 0.60. With the median and mean so close together and since our previous Reasonable Redemption Value (RRV) for IHG points was 0.60 cents per point, we’ll keep the RRV the same as before 0.60. As you can see in the chart above, the average value per point barely changed from a year ago, but the min and max point values rose slightly.
Pick your own point value
|50th Percentile (Median)||0.59||0.58||0.43||0.67|
When we publish Reasonable Redemption Values of points (RRVs), we conservatively pick the middle value, or the 50th percentile. The idea is that just by randomly picking hotels to use your points, you have a 50/50 chance of getting this value or better. But what if you cherry-pick awards? With some other hotel programs, the 80th percentile cents per point is much higher than the median. And this used to be true with IHG too, but in my latest analysis I found that the 80th or even 90th percentile was only slightly higher than the median. To be clear, there are cases where you can get better than 0.65 cents per point value, but the chance of stumbling upon that higher value is surprisingly low.
To me, this analysis shows that even those who cherry-pick good value awards can’t count on regularly getting much more than 0.6 cents per point value with properties within the U.S. That’s unfortunate.
New Reasonable Redemption Value: 0.6
Our Reasonable Redemption Value (RRV) for IHG points was previously set to 0.6 cents per point and there’s nothing in the latest analysis to lead me to change that valuation. RRV’s are intended to be the point at which it is reasonable to get that much value or better for your points. In this case, it’s not necessarily easy to get much more value, but it’s definitely easy to get around 0.6 cents per point value.
- Reasonable Redemption Value for IHG: 0.6 cents per point (unchanged)
- Reasonable Redemption Value for those who cherry pick awards: 0.65 cents per point
Overvaluing vs. Undervaluing Points
A number of people have argued that I should include taxes in the hotel rates used for analyses like this one because leaving out taxes means undervaluing points (since free night awards do not incur most taxes). However, there are many factors besides taxes that are equally important and also, for the sake of simplicity, are not included in my analyses. My hope is that these factors roughly balance each other out…
Factors that cause us to undervalue points
- We do not include hotel taxes in our analyses. Most taxes are charged on paid stays but not award stays.
- With hotel programs that offer 4th Night Free Awards (IHG, with certain credit cards), or 5th Night Free Awards (Hilton & Marriott), or award discounts (Wyndham), we do not consider the point savings in our analyses.
- With hotel programs that offer free parking on award stays to top-tier elites (Hyatt), we do not factor this in.
Factors that cause us to overvalue points
- We do not use discount rates (other than member rates) in our analyses. In real-life, many people book hotels cheaper (and sometimes far cheaper) by using AAA rates, government & military rates, senior rates, etc.
- We do not use hotel promotional rates. Often, individual hotels have deals such as “Stay 2 Nights, Get 1 Night Free” which can greatly reduce the cost of a stay.
- We do not use prepaid rates in our analyses. Sometimes these rates are significantly lower than refundable rates.
- We do not factor in rebates which can be earned from booking hotels through shopping portals.
- We do not factor in points earned from paid stays. These points can be thought of as a rebate on paid stays only.
- We do not factor in extra points earned on paid stays for those with elite status.
- We do not factor in hotel loyalty program promotions: Most promotions, but not all, only offer incentives for paid stays. We often see promos offering bonus points, double or triple points, free night awards, etc.
Given the factors listed above, I think that including taxes in our analyses would lead us to over-value points.
Based on the latest analysis, I kept our IHG RRV the same: 0.6 cents per point. The idea is that you have equal chance of getting that much value or more from your award stays. Further, the latest percentile results show that those who cherry-pick awards (90th percentile) can expect to get around 0.65 cents per point. That’s not very different from the median. It shows that opportunities for getting far outsized value from IHG points have dwindled with time. Sad.
For a complete list of Reasonable Redemption Values (and links to posts like this one), see: Reasonable Redemption Values (RRVs).